13 October 2010

The state just can't win

The state [of California] announced Monday it is selling 24 government office buildings — including the Ronald Reagan State Building in Los Angeles and the San Francisco Civic Center — to a group of private investors for $2.3 billion.

One the one hand, I'm glad to see the state getting serious about trying to pay its bills, and all the more so because it is doing so by putting the land into private hands where it can be used to boost the economy:

"This sale will allow us to bring in desperately needed revenues and free the state from the ongoing costs and risks of owning real estate." Gov.Arnold Schwarzenegger and lawmakers included the sale as part of the state budget last week.

On the other hand, this only helps the state once and unfortunately it appears that the forest is being obscured by the trees:

The Associated Press reported earlier this year that the deal would end up costing the state $5.2 billion in rent over 20 years, perhaps saddling taxpayers with costs beyond whatever the state would net from the sale.

[...]

The nonpartisan legislative analyst's office also warned that selling the properties then renting back the space could cost the state an additional $1.5 billion, based on a 35-year projection.